Business Environment and Strategy

This assignment explores the relationship between the business environment and effective strategy formulation. Students are required to analyze various aspects of the business environment, including political, economic, social, technological, legal, and environmental factors (PESTLE), and their influence on business operations and growth. The assignment encourages critical thinking about how businesses can leverage opportunities and mitigate risks within a dynamic external context.

Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Covered in PPT.......................................................................................................................1
TASK 2............................................................................................................................................1
P3 Relationship between different functions of organisation and their link with organisational
objectives and structure..........................................................................................................1
TASK 3............................................................................................................................................5
P4 Identification of positive and negative impacts of macro environment on business
operations...............................................................................................................................5
TASK 4............................................................................................................................................6
P5 Internal and external analysis of organisations to identify strengths and weaknesses......6
P6 Interrelation of strengths and weaknesses with external macro factors............................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business Environment refers to the surroundings within which firm operates and run its
day to day activities and functions. In consist of all the internal and external forces that affects all
the operations of company. Business environment factors includes management, customers,
suppliers, employees, regulations, supply and demand etc. All these forces needs to be consider
by management as it helps them in formulating effective strategies and policies. In the present
assignment, chosen organisation is Unilever plc which is a transnational consumer goods firm
headquartered in London, United Kingdom. This report covers different size, types and scope of
organisations as well as interrelationship between different functions of firm and their link with
organisational structure. Apart from this, the project also demonstrate positive and negative
impact of macro environment on business operations. At last, internal strengths and weaknesses
of business and their interrelation with external macro factors are defined in this project.
TASK 1
Covered in PPT
TASK 2
P3 Relationship between different functions of organisation and their link with organisational
objectives and structure
Unilever is one of the well known transnational consumer goods company which offers
personal care products, food, beverages and cleaning agents to customers. Its main aim is to yield
higher profits and revenues. For fulfilling needs of various customers, several efforts are done by
firm (Asif, and et. al., 2011). In Unilever, various departments are run including human resource
management, marketing, finance, production etc. Each department perform different roles and
responsibilities, but work for attaining common purpose of attaining business goals. Various
departments of Unilever and their link with organisational objectives are defined below:
Human Resource Department: This department is associated with recruitment and hiring
of skilled personnel. In Unilever, managers have the responsibility to determine manpower needs
of company and recruit candidates accordingly. They prepare job applications and communicate
about vacant positions of firm with the help of marketing department. Selection of candidates is
done on the basis of qualifications and skills of individual (Bhaduri and Ha-Brookshire, 2011).
Managers also conduct proper training programmes for existing and new employees as well in
order to enhance their knowledge, expertise and competencies. Existence of skilled manpower
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within organisation helps in attaining goals and objectives of Unilever plc. As with competent
and knowledgeable employees, work can be performed in efficient manner which results in
improving productivity of firm and ensures attainment of its predetermined objectives.
Marketing: Crucial role is played by marketing department in success and growth of
company. This department of Unilever analyse marketing trends by doing proper market
research which helps them in identifying needs and preferences of customers. Determination of
these helps them in developing products accordingly (Cavusgil and et. al., 2014). It enables
managers of firm to frame appropriate plans and strategies for promoting these products into
market. Use of various promotional tools like advertisement, sales promotion etc. in marketing of
product helps in effectively communicating its value and benefits among customers which
ultimately results in accomplishment of goals and objectives of Unilever plc. The main objective
of marketing department is effectively communicate its goods in market and attract large number
of customers that ultimately increases their sales.
Finance: Finance is considered as the life blood of any business firm as without this, no
functions can be performed. In order to run day to day operations smoothly, company should
have adequate amount of funds. Financial position of company determines its sustainability and
success (Chetwood and et. Al, 2014). In Unilever plc, main function of this department is to
manage funds, prepare budgets and allocate funds to each department to ensure smooth running
of their operations and functions. Managers are require to focus on maintaining appropriate
amount of funds within organisation so that all the day to day operations can be run properly. If
funds are adequately maintained and all the operations are perform in effective manner then it
will ensure accomplishment of goals and objectives of Unilever plc.
Productions and operations: This is the department which is concerned with
manufacturing of goods and services. Its main function is to convert raw material into finished
goods. The main responsibility of productions and operations manager of Unilever plc is to
ensure production of high quality products by making proper utilization of resources. Manager
should focus on minimizing cost by using resources in proper manner (Crane and Matten, 2016).
Marketing department provides all the information regarding needs and preferences of customers
to production department and then manager ensure development of product accordingly.
Primarily, this department emphasize on quality of products which ensures satisfaction of needs
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and requirements of customers. If firm is able to satisfy needs of customers in an effective
manner then it leads the organisation towards attainment of its objectives.
Above mentioned are the various departments that are functioning in Unilever plc. All
these departments are depend on each other and work collectively towards attainment of goals
and objectives of company.
Different types of organisational structure:
Functional structure: These are bureaucratic organisational structure which divides the
company on the basis of speciality. Its main advantage is that employees are dedicated to single
function and as their roles are clearly defined, there are less chances of confusion.
Divisional structure: This structure groups each function of firm into division. It
organises the business activities products and services, market or geographical group. Main
advantage of this structure is that it enables team to emphasize on single product or service with
such leadership structure that assist its main strategic objectives. Divisional organisational
structure is followed by Unilever plc. Main characteristics of which includes: Product type
divisions, Corporate executive teams and Geographic divisions.
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Matrix structure: In this structure, reporting relationship are established as matrix or grid
instead of traditional hierarchy. It is a complex structure in which people have dual reporting
relationship. Its main advantage is that it increase coordination that leads to more effective
control on operations.
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TASK 3
P4 Identification of positive and negative impacts of macro environment on business operations
This process help business organisation to analyse external factor that can effect the
working of its operation. In general PEST analyse in a easy and widely used to process that help
to study Political, Economic, socio cultural and technological factors that changes in the business
environment.
Political- It refers to the government factors and regulation or any other rules that has to
be followed by particular business and firms. This includes tax policies, operating laws,
employments rules etc.
Positive- Political condition in UK is stable that has a good impact on the operation
performed in Unilever.
Negative- If tax policies are high in UK than it has a negative impact on the growth of
Unilever and decrease profitability.
Economical- This is related to the study of economic factor that might have some impact
on the business environment. These factor help in ascertain the demands of product, cost ,
expansion of business etc. There are various economic factor such as interest rate, economic
growth, inflation rate and exchange rate.
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Positive- Unilever has large number of opportunities to expand their business and
improve its working as economical condition of UK is good.
Negative- If the labour and energy cost is high then it increase the cost of product which
has negative impact upon their profit margins
Social factors- It refer to the macro environment of business organisation that includes
the study of demographic changes, need of customer, size of business etc. It also includes change
in trends of customer, population growth etc.
Positive- Young generation has played an important role in expanding business of
Unilever has they has increase the social level of country.
Negative- Low education level reduce the use of social media and there is a decrease in
the sales of Unilever product.
Technology factor: These Factors are considers to the rapid changes in the technology
like automation and innovation.
Positive- New introduction of techniques in production process help company to produce
more product and their would be enough sale in UK.
Negative-If the management of Unilever not adopts new techniques then it reduces their
ability to satisfy the different requirements of customers.
TASK 4
P5 Internal and external analysis of organisations to identify strengths and weaknesses
SWOT analysis is tool to analyse strengths, weaknesses,opportunities and threat which are
related to the business. In this strengths and weaknesses are internal and opportunities and threats
are external for the organization (Gharajedaghi, 2011). Unilever is a dominant multi national
company in fast moving consumption goods sector. It operates in personal care, food,
refreshment, home care etc. it provides more than 400 brands to its customers. The following is
SWOT analysis of Unilever Ltd.:
Strengths Weaknesses
 Company operates at a large scale and
has a wider reach.
 Strong portfolio of products.
 It offers more than 400 brands to its
 Business acquisitions affect
profitability.
 All consumer products are easily
imitable.
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customers.
 Customers believe in quality and trust
the products.
 Spend large amount on research and
development for innovation in
products.
 Strong marketing and advertising.
 CSR initiative makes its position
stronger in market.
 Economies of scale gives competitive
advantages.
 Innovative marketing practices to
deliver products.
 Investment in training employees.
 Flexible price change policies as per
willingness to pay of consumers.
 Zero switching cost for customers.
 Ease of availability of substitutes.
 Behaviour of customers are influenced
by behaviour of retailers.
 Price wars due to intense competition.
Opportunities Threats
 Health conscious product demand.
 Change in lifestyle increase the demand
for innovative products.
 Expansion of business to cater markets
like Russia, Iran, Iraq and Afghanistan.
 Move operations in underdeveloped to
save labour cost.
 Building up supply chain in high priced
markets to increase profitability.
 Largest consumer products
manufacturer.
 Integration of international culture.
 Use of social media for advertising
 Economic crisis.
 Increasing global competition.
 launch of new local products.
 Changes or introduction of laws related
to environmental issues.
 Fluctuations in currency rates.
 Low product differentiation.
 Innovation in new technology and less
innovation due patent related issues.
 Use of Ayurveda products is a big
threat to company.
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products.
 Opportunity to make sustainable and
environment friendly products for its
environmental friendly consumers.
P6 Interrelation of strengths and weaknesses with external macro factors
Both strengths and weakness of a company are largely related with the external factors of
environment in which company operate. Management compare strengths of entity with macro
factors which include political, social, technological, legal, environmental and economic. This
help company is identify the growth opportunities for business exist in market and also help in
detect the elements which serve a threat to company’s operations. Another benefits of this
comparison is that it helps in develop effective policies and strategies which ensure smooth
execution of commercial activities and at the same time help in attain set business objectives.
Interrelationship of strengths and weakness of company with external environment factors can be
understood by the following points:
 Political: This factor indicate the modification changes take place in laws and
regulations introduce of government of the country in which company operate.
Legislations, tax policies, import export duty and many more come under this.
Frequent changes in government policies, increase in tax rates and import policy
proved as a weakness for entity as this affect company’s operation in negative
manner (Gilboy, 2016). On the other hand, stability in government of a country and
its policies serve a positive factor for entity.
 Economic: This is another factor of external environment, this cover inflation rate,
deflation rate, GDP of country, purchasing power of individuals living in that
country and many more. This is one of the major factor that require to be examine by
Unilever before formulate its business strategies. Fluctuations in these elements
affect business operations in positive and negative manner (Li and et. al., 2011).
Brexit is one of the example of changes in economic conditions of a country that
largely affect the company’s operations and its profits in negative manner.
 Social: This Component define the habits, lifestyle, taste, attitude, behaviour and
perception of individuals living in the area in which company operate. All these
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largely affect the purchase behaviour of people and affect company’s activities.
Increase demand of healthy food products is a strength for Unilever as by offer
organic food products, company can generate more revenues.
 Environment: This factor cover the environment laws and regulations developed by
the communities of area in which company operate (Kaufmann, Kraay and
Mastruzzi, 2011). It is very important for Unilever to consider the environmental
impacts of its production process in order to sustain in market for long run.
 Technological: Technology use by company operate in retail sector play a big role in
its operations and profits. Unilever use updated technology for carry out its
production process and this is one of the major strength for firm as this ensure
minimum wastage of raw material and enhance efficiency activities (Kian Chong,
Shafaghi and Leing Tan, 2011).
 Legal: This factor defines the laws, legal rules, regulations and different rules exist
in the country in which company operate. Unilever operates in various areas of world
so sometimes it become difficult to deal with the different laws exist in different
areas. Changes in legal policies of various countries serve as weakness for firm.
CONCLUSION
As per the above mentioned report, it has been concluded that business environment is
the surroundings where a firm perform its operations and functions. Various internal and external
factors are exist in business environment that needs to be considered by manager. Each
organisation have its different size, scope, purpose and legal structure. Various departments are
available within an organisation including human resource management, marketing, finance,
productions and operations etc. All these departments are work collectively for attaining
objectives of business. SWOT analysis helps the firm in determining its strengths, weaknesses,
opportunities and threats. Strengths and weaknesses of company are interrelated with macro
factors. Consideration of these assists manager in formulating appropriate strategies that leads
the company towards high growth and success.
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(Asif, and et. al., 2011) (Bhaduri and Ha-Brookshire, 2011) (Cavusgil and et. al., 2014)
(Chetwood and et. Al, 2014) (Crane and Matten, 2016) (Gharajedaghi, 2011) (Gilboy, 2016)
(Kian Chong, Shafaghi and Leing Tan, 2011) (Kaufmann, Kraay and Mastruzzi, 2011) (Li and
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2012)
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